Lessig on the charges against Dotcom and Megaupload

kim dotcomThis morning, Kim Dotcom, accused by the Department of Justice of criminal copyright infringement, is in a New Zealand court to see if he will be extradited to the United States.

One of the things in Dotcom’s corner is testimony from Lawrence Lessig, a preeminent U.S. copyright scholar, and current presidential candidate. He argued to the court that the DOJ doesn’t have a legitimate case against Dotcom. Of course Lessig isn’t exactly a neutral party. As he acknowledged to the court, on top of being retained by Dotcom’s defense, he’s also advocated for copyright reform, co-founding Creative Commons.

But how’s his argument stack up? His first argument strikes at the heart of the DOJ’s theory, contending that the DOJ is improperly seeking to import the concept of secondary liability, recognized in MGM Studios Inc. v. Grokster, Ltd., to criminal law. This is “improper,” he contends, “because, in the United States, crimes must be clearly defined by the legislature and prosecutions are confined within express criminal statutes.” There is a fair argument to be made that this importing of principles from civil law violates the rule of lenity.

Lessig then takes aim at one specific allegation against Megaupload: that it failed to comply with DMCA take-down requests. Lessig explains that, if multiple users uploaded the same file, Megaupload would retain only one copy of the file, but would generate multiple URLs for each user who uploaded it. When Megaupload received take-down requests for one URL, Lessig argues, it should not have needed to take down all URLs linked to the same file, and even if it did, it should not face criminal liability for that action.

Lessig also takes on an even more controversial issue: whether U.S. copyright law extends to parties acting in other countries. Megaupload in fact had leased servers in the United States. But Lessig asserts that the Superseding Indictment doesn’t discuss this fact. Nor, he claims, does it allege that a directly infringing act occurred in this country.

Lessig then turns to what I believe is the core of Megaupload’s defense if it ultimately goes to trial in the United States: whether any of the defendants willfully violated copyright law. He notes that the willfulness standard “requires a stronger showing in a criminal copyright claim than in a civil claim.” (That is why claims of compliance with DMCA rules is a red herring in the Megaupload prosecution.) Lessig suggests that U.S. prosecutors are merely “[a]ttacking an ISP for generally bad or negligent policies or alleging how the ISP could be better, faster, or more precise in its takedown or repeat infringer policies is not enough.” And that, he contends, is not proper fodder for a criminal case.

Not all U.S. copyright scholar agree. James Grimmelman has observed that “If proven at trial, there’s easily enough in the indictment to prove criminal copyright infringement many times over.”

In a 2013 article, a co-author and I also suggested that, “if the facts alleged in the indictment are proved, the willfulness requirement will likely be met,” for the following reasons:

According to the indictment, the operators of Megaupload were just as intentional in their copyright infringement as The Pirate Bay, collecting advertising revenues generated by infringing content and exchanging incriminating emails showing that they knew about the infringement on their service. One operator joked to another that they “have a funny business . . . modern days pirates :),” to which his co-conspirator responded, “we’re not pirates, we’re just providing shipping services to pirates :).” Megaupload similarly sold premium access to unlimited streaming of uploaded content and financially rewarded users—even those previously caught uploading infringing material—for uploading popular content and for posting links to that same content on other websites. This practice not only increased traffic but also allowed Megaupload to avoid listing infringing videos directly on the site, concealing the scope of the infringing content on its servers. To rebut claims of infringement, Megaupload had instituted an “Abuse Tool,” allowing copyright holders to report, and purportedly remove, infringing content. But the indictment alleges that the company received millions of requests to remove infringing content and, “at best, only deleted the particular URL of which the copyright holder complained, and purposefully left the actual infringing copy of the copyrighted work on the Mega Conspiracy-controlled server and allowed access to the infringing work to continue.”

Lessig does a good job of showing the other side of these facts. But whether it is enough to defeat extradition is yet to be seen.

Also lurking in the background is the idea floated in the 2013 piece: just because prosecutors can, doesn’t mean they should.

Megaupload has not been convicted, and may never be, yet its business has been shut down, its assets frozen, its customers left unable to retrieve even lawfully stored data. Some of this smacks of the treatment of the King’s Messenger: punishment first, with trial after. … [W]hen the alleged conduct is egregious, and civil lawsuits are ineffective, then a criminal prosecution, with all its attendant hardships for the accused, may be warranted. But [those guidelines] are intended as limitations, not as a call to pursue more prosecutions. Because the powers of federal prosecutors are great, a reluctance to use those powers is a virtue that preserves liberty.

If the case survives today, then the court might consider employing the “substantial unoffending uses” test suggested here for evaluating the secondary criminal liability of providers of technology that has both criminal and non-criminal uses.

Update on Kim Dotcom Extradition

Kim Dotcom crowdThere’s been two significant developments this week in the ongoing effort to extradite Kim Dotcom (the CEO of the now-defunct Megaupload) from New Zealand to the United States to face criminal charges of copyright infringement. I’ve been following the proceedings since co-authoring Criminal Copyright Enforcement Against Filesharing Services, 15 North Carolina Journal of Law and Technology 101 (2013).

First, there is a development in regard to fallout from the January 2012 raid on Dotcom’s mansion conducted by New Zealand police, at the request of U.S. authorities.  Dotcom audaciously mocked the raid at the launch event for his new service “Mega” in January 2013 by staging “a raid re-enactment complete with helicopters marked ‘FBI,’ and dancing girls clad in military-style dress (but with miniskirts).”

Meanwhile, Dotcom has challenged the search warrant underlying the raid in New Zealand courts. This had some success. First, the Prime Minister apologized to Dotcom for the government spying on him. Then, in November 2013, a New Zealand High Court Judge ruled that the search warrants used in the raid were not proper because they were just “general warrants” and thus “did not adequately describe the offences to which they related.”

This week, however, Dotcom has faced a set back. On February 19, an appellate court issued a decision disagreeing with the High Court Judge’s analysis and concluding that the warrants were valid. You can read the appellate decision here.  Dotcom has vowed on Twitter to appeal to the New Zealand Supreme Court. But as noted by the Independent, “[t]he decision will benefit US prosecutors who say the Megaupload website has cost film studios and record companies more than $500 million (£300 million) and generated more than $175 million in criminal proceeds by letting users store and share copyrighted material, such as movies and TV shows.”

Second, the extradition hearing for Dotcom that was scheduled for April 2014 was delayed on February 25, with a new date yet to be set. It’s already been delayed before. The delay is probably meant to allow time for the proceedings about the search warrant to resolve. But Dotcom, in his standard provocative manner, has”accuse[d] the New Zealand government of interfering in the judicial process, to delay the hearings until after the country’s election, due in either October or November,” according to The Register.

Third, as a bonus, Dotcom gave an interview this week to Complex Tech in which he mouths off about the charges against him. He complains that Google has had many more takedown requests related to pirated links than Megaupload ever had, but yet is still in business. Of course, as my paper explains, Megaupload’s real problem wasn’t the number of takedown requests it received, it’s that prosecutors allege that the company either ignored those requests or helped facilitate the re-posting of pirated material.

Finally, Dotcom also mentions in the interview some sort of tripped-out new file service “called Meganet, which is basically kind of like a fluid ocean of data where whatever glass of water you dump into it you can never extract from it anymore, and you kind of just meet the water in the ocean somewhere.” We’ll see where that goes.

The Hacker Ethic and Crime

CCCamp 2007 20
I’m working on a new piece about how criminal law deals with technology creators, especially when innovation leads to a certain lawlessness, as has occurred with the so-called Hacker Ethic. I’m posting some thoughts derived from Steven Levy’s book Hackers, to solicit any feedback the Internet might have to offer.

To understand the modern opposition to technologists as criminals, we must return to the dawn of the computer age, when a distinctly anti-authoritarianism view of technology emerged: the hacker ethic. In the early 60s, student programming hobbyists (later called “hackers”) at Massachusetts Institute of Technology developed a unique culture hailing the virtues of access to computer technology and freedom of information. These early hackers believed deeply in the ability to improve life through technology and resented barriers and bureaucracies that hindered their hands-on exploration and betterment of the world around them. This resentment came, in no small part, from contempt for the haughty guardians of MIT’s million-dollar mainframe IBM computers, the so-called “Hulking Giants,” from which they were prohibited with tinkering. Even computing time on less-valuable machines was precious, and the hackers were, in the early days, forced to scavenge time from “Officially Sanctioned Users.”

This mentality led to a veneration of decentralized experimentation, and a certain “willful blindness” to what hackers saw as inefficient restrictions.  In mischievous pursuit of exploration—though not malice—they probed flaws in MIT’s phone system, intentionally crashed the “Hulking Giants,” and ignored prohibitions on tampering with computer hardware. Having no concept of property rights, they often broke into university labs at night to sneak components, without ever considering it stealing. But in the same spirit, they shared their software creations without thought to passwords, royalties, or licenses, repeating their mantra that “information should be free.”

As the computer revolution spread, so did the hacker ethic. It first jumped coasts, where Californian “homebrew” computer enthusiasts, with an undercurrent of post-hippie activism, collaborated to bring computers to the people by hacking hardware and sharing software, even proprietary applications like Atari’s Pong. As the market for personal computers grew, some software creators began to complain; a young Bill Gates, in a widely circulated open letter to homebrew hackers, accused them of stealing. Although the hackers initially condemned Gates’s letter, many realized over time that selling computers and software could be immensely profitable, and a few, like Steve Wozniak with Apple Computer Company, used their hacker skills to become multi-millionaires. Eventually, the hacker ethic would be credited as inspiring the minds behind tech giants like Microsoft, Google, and Facebook.

Yet even as some hackers were becoming successful entrepreneurs, others entrenched themselves in the movement’s anticommercialism and disregard for property rights. This mentality was often expressed in noble (and perfectly legal) pursuits like Richard Stallman’s fervent evangelism about open-source software. But it also gave birth to a certain lawlessness that would land next-generation hackers in court and mar the term “hacker” with the connotation of “digital trespasser.”

Many times, this lawlessness took the form of antipathy toward copyright restrictions. A strong coalition of media companies and lawmakers, have pushed back on online filesharing, which they view as a significant threat to business. After a failed, high-profile attempt to criminally punish MIT student David LaMacchia for maintaining an online bulletin board with copyrighted software files, these forces successfully implemented strong prescriptions, embodied in the Digital Millennium Copyright Act, against the distribution of technology designed to circumvent Digital Rights Management technology. But peer-to-peer filesharing grew despite these efforts, propelled by hacker-led services, like Napster, many of which were eventually crushed by civil infringement lawsuits. These services typically tried to defend themselves on the grounds that they could not be liable for the infringing acts of their users merely by providing technology. But in Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., the Supreme Court rejected this argument concluding that “secondary” copyright infringers can be liable as long as they intended to promote infringement. This decision paved the way for criminal copyright actions against services like link-listing website NinjaVideo and cyberlocker Megaupload, both of which prosecutors alleged aided and abetted copyright infringement (see my forthcoming article on this topic).

Filesharing companies aren’t the only type of computer technology company to face criminal scrutiny. Programmer Robert Stuart was indicted in New York for violating a state law against gambling promotion by selling online-sportsbook software, even though his software is legal in other jurisdictions and he never accepted an illegal bet; his crime, if anything, is willful blindness to his customers’ activities. Other software providers have faced charges of aiding and abetting criminal activity by enabling users to generate spam emails in violation of the CAN-SPAM Act, facilitating child pornography and terrorism through distribution of digital currency, and allowing circumvention of copyright protections and paywalls for Internet service.

Hacker progenies also have pushed to its limit the notion that information should be free. In on ongoing, high-profile case, army intelligence analyst Bradley Manning was found guilty of severe criminal charges—and was charged (though found not guilty) of the capital charge of “aiding the enemy”—for leaking classified documents to the website WikiLeaks, which published them online. Another prominent, and controversial, example is hacker Aaron Schwartz, who committed suicide after his arrest and prosecution under the Computer Fraud and Abuse Act for using a computer program to download academic articles, which prosecutors alleged he intended to distribute, from the online repository JSTOR. The controversy surrounding both of these situations underscores the often fine line between hackerism and crime.

The Computer Fraud and Abuse Act, widely criticized as outdated, has caused particular trouble for hackers. Along with Aaron Schwartz was Andrew “weev” Auernheimer, found guilty under the Act for his role in discovering and informing the media about a flaw in AT&T’s security system. An appeal is ongoing, and many legal scholars believe he has a good chance of overturning his conviction.

I will continue to blog about this issue as I continue to research it. My goal, along with my coauthor, is to draw broad guidelines for courts to apply when addressing conspiracy and aiding and abetting charges brought against technology creators. Any thoughts?


Why patent infringement shouldn’t be criminalized

First U.S. patent, signed by George Washington

Sorry for the overdose of IP law recently, I plan to return to local-government topics ASAP.

But my recent article discussing criminal enforcement of copyright caused me to wonder about why patent infringement is not a crime in the United States (aside from falsely asserting a product is patented or forging the seldom-used “letters patent”).

Why this disparity between different forms of IP protection? It surprised me how many different theories emerge. For example, professor Irina Manta lists three possible justifications in her article “The Puzzle of Criminal Sanctions for Intellectual Property Infringement” (footnotes omitted):

There could be a moral or utilitarian distinction between soft IP and patents, and the differing availability of criminal sanctions may be warranted because infringers of soft IP cause more harm and/or require harsher punishments for deterrence than infringers of patents. Alternatively, perhaps criminalizing soft IP infringement provides the proper balance of incentives for creators by giving them the safety of added protections for their works, whereas it would overly deter inventors in the patent context. Another possible explanation for the distinction is a public choice rationale: while a number of industries lobby for stronger protection for soft IP (especially copyright), different industries are at odds with one another regarding the proper level of protection for patents.

The Executive Office of the U.S. Attorneys also has commented on this disparity in the third edition of its training handbook “Prosecuting Intellectual Property Crimes,” which notes on page 246 the distinctions between patents and other forms of intellectual property:

Although patents and copyrights share a common constitutional source (and the concomitant requirement that these exclusive rights are for “limited times”), they differ in several meaningful respects. First, copyrights grant an author the right to exclude certain uses of the author’s expression of an idea contained in an “original work of authorship,” whereas patents grant an author the right to exclude others from making, using, and selling devices or processes that embody the claimed invention. Second, in exchange for granting the patentee this right to exclude, the patentee must publicly disclose the invention. Eldred, 537 U.S. at 216. “For the author seeking copyright protection, in contrast, disclosure is the desired objective, not something exacted from the author in exchange for the copyright.” Id. at 216. Third, a copyright gives the holder no monopoly on any knowledge or idea; a reader of an author’s writing may make full use of any fact or idea acquired by reading the writing. See17 U.S.C. § 102(b). A patent, on the other hand, gives the patentee a monopoly on his invention to prevent the full use by others of the knowledge embodied in the patent. Eldred, 537 U.S. at 217.

It is also worth considering the difference between a patent and a trade secret. The first difference is naturally that trade secret information is protected only if it is secret (see Section IV.B.3.a.v. of this Manual), whereas a patent is protected even after disclosure. During the patent process, a trade secret contained in a patent application may lose its trade secret protection through disclosure only to gain patent protection. (See Section IV.B.3.a.vi. of this Manual). Second, a patent gives its owner an exclusive right to his invention, even against another who discovered the patented invention independently, whereas a trade secret, like a copyright, gives its owner no protection against independent discovery. Confold Pac., Inc. v. Polaris Indus., 433 F.3d 952, 958-59 (7th Cir. 2006) (Posner, J.).

I think that the most compelling explanation may be that patents, unlike copyright, are especially at risk of being too broad. This is particularly so in industries like software, where an understaffed patent office cannot sufficiently limit incoming applications.

Although Abraham Lincoln once famously remarked that the patent system “added the fuel of interest to the fire of genius,” today many people see the patent system as enabling arsonists: Aggressive patent holders who use overbroad patents and costly lawsuits as a means to burn the competition.

Criminal enforcement of copyright

Kim Schmitz cropped and edited
Kim Dotcom, head of Megaupload.com, indicted for copyright infringement

My perspicacious coauthor and I recently accepted an offer from the North Carolina Journal of Law and Technology to publish our article “Criminal Copyright Enforcement Against Filesharing Services,” which I mentioned here last week. In honor of that, I’d like to share the introduction of the article, sans footnotes:

In January 2012 an elite squad of New Zealand anti-terrorism officers, under the direction of the United States Department of Justice, stormed Kim Dotcom’s lavish $24-million mansion. Equipped with body armor, tactical firearms, dog units, and a helicopter, the squad uncovered Dotcom hiding in a specially designed saferoom. As he was whisked to a police van, Dotcom asked the charges against him. The answer was two words: “Copyright infringement.”

The indictment of Dotcom and his infamous filesharing service, Megaupload, marked the start of a new battle in what reporters have christened the “copyright wars.” Yet it is not the federal government’s only recent foray into the fight against online filesharing services, which, viewed as hotbed for copyright infringement, have been under a decade-long siege of civil litigation from media companies. In 2010, for example, the Department of Homeland Security mounted “Operation in Our Sites” to seize the domain names of websites providing access to infringing content, and the operation has since resulted in the seizure of more than 400 domain names. The issue more recently caught the attention of Capitol Hill, where bills were introduced in both the House and Senate to target foreign websites that link to or host infringing content.

But these efforts have not always been effective. For many of the domain names seized by the Department of Homeland Security, the same infringing content quickly appeared on sites with only slightly modified web addresses, and a few sites even grew in popularity. And the backlash against the two new bills was fierce: many popular websites staged a “blackout” in protest, including the online encyclopedia Wikipedia, citing fears that they would face sanctions merely for linking to controversial sites, even in informational articles.

Meanwhile, other countries have seen some success in directly prosecuting the operators of filesharing services. First, Japan convicted Isamu Kaneko, a computer-science researcher who developed Winny, an early peer-to-peer filesharing system. Kaneko arguably fostered dubious uses of his service by collecting feedback and announcing updates through an anonymous Internet forum dedicated to filesharing. But although Kaneko was convicted by a Japanese district court, the Osaka High Court reversed the conviction after concluding that Winny was “value neutral”—essentially, capable of non-infringing uses—and that Kaneko did not offer Winny primarily to promote infringement, even if he knew that it was probably being used for that purpose. This decision touches on a key question in this article: if a filesharing service is known to have rampant infringing uses, at what point do the service’s operators open themselves to criminal sanctions?

More successful was Sweden’s prosecution of the operators of the Pirate Bay, then one of the Internet’s largest peer-to-peer filesharing services. The operators of the Pirate Bay mocked their contribution to infringing activity, often publishing and ridiculing complaints from copyright organizations. Although Sweden once had a reputation for relaxed copyright laws, the country amended its Copyright Act in 2005 to make it a crime to transfer copyrighted content without permission. When prosecutors then indicted four operators of the Pirate Bay in 2008 for “complicity” in violating the Act, the operators raised the same arguments as Kaneko: that their services had noninfringing uses, and that they were ignorant of any specific infringing activity. But the court found them guilty, emphasizing that they had profited from infringing content by collecting advertising revenue and that knowledge of specific infringing content was unnecessary given that they had created conditions that fostered infringement and ignored notices of infringing content. The defendants were sentenced to one year in prison each and ordered to pay restitution of $4.3 million.

The success of this prosecution has been heralded as harbinger of ones like the action against Megaupload. Yet criminal prosecution of filesharing services is a new development in the United States, and only time will tell whether this new approach proves effective, or under what circumstances it should be used. The future holds many questions: What pushes a legitimate online file-storing business over the edge to criminal enterprise? How might criminal copyright enforcement differ materially from civil enforcement? We seek to answer these questions in this article. We focus on those online businesses enabling users to share infringing content with others online, and we refer to these businesses simply as “filesharing services,” intending this definition to cover diverse types of technology—including “cyberlockers” like Megaupload, which host files on servers controlled by the service, and “torrent” sites like the Pirate Bay, which provide links to connect users to infringing files stored by their peers.

In the end, we conclude that criminal enforcement actions should be limited to those filesharing-service operators that, in order to profiteer from infringing content, foster infringement by egregiously defying the established boundaries of copyright law and civil means of copyright enforcement.

Legal aspects of big data

big data sheriff's star“Big Data”— the business-world buzzword for the collection and analysis of massive amounts of data—has caught on with local government officials in the past few years as many cities have developed extensive data portals providing citizens access to heaps of public information like data from 311 calls. And its not only local governments getting involved, in 2012 the White House announced the “Big Data Research and Development Initiative,” through which federal agencies would commit funding toward collecting and analyzing “huge volumes of digital data.”

So, what sparked this interest in “Big Data”? In short, innovations in computing, particularly the ability to allow users to remotely access large data sets stored on third-party servers, i.e., “cloud computing.” But as attorney John Pavolotsky wrote last November in Business Law Today, “[w]hile business publications have written widely about Big Data, legal commentators have written sparingly on the subject.”

Pavolotsky goes on to note three areas of legal concern he see with Big Data: privacy, data security, and intellectual-property rights. He does not dwell long on data security and IP rights for long, other than to note that API licenses should be reviewed carefully to determine the permissible scope of data distribution. He focuses instead on privacy, arguing that, because of the “inherent squishness” of the legal standard applied to collection of cellphone or GPS data under the Fourth Amendment—which protects guards people’s “reasonable expectation of privacy”—perhaps legislatures should limit the length of time data can be stored.

I’d like to add one other interesting question surrounding Big Data, though it leans more economic than legal: whether data collection should remain public or be privatized. This issue comes up with vacant-property registration, which I’ve written about before, as many local governments allow registration through MERS, a private company, rather than directly through local data systems. Government officials are then provided access to MERS.

Privatization of data collection and analysis provides many benefits, particularly in that it is cost-effective for local government to take advantage of an already developed platform. The primaru draw back, however, is the risk of industry capture, as with MERS and its association with the mortgage industry.

The best solution, when available, is for local governments to take advantage of open-source programs or nonprofit developers (as available through Code for America). Otherwise, there are companies like Socrata that, as far as I can tell, are not closely associated with any industry other than the cloud-computing and data-collection industry.

New article on criminal prosecution of filesharing services

kim dotcomAlong with a coauthor, I’ve written an article about criminal enforcement actions against filesharing services, including the ongoing prosecution of the operators of Megaupload. The article also touches on the actions against the Pirate Bay and NinjaVideo. This area of law is important in defining how the federal government protects creators of copyrighted content without stifling innovation. Yet many questions remain about the extent of criminal liability of these services as “secondary” infringers. You can download the article here (and if you do, please let us know what you think). The abstract is below:

The high-profile prosecution of the popular online storage website Megaupload for criminal copyright infringement is the latest in a series of recent criminal prosecutions of online filesharing services. But what pushes a legitimate online file-storing business over the edge to criminal enterprise? How might criminal copyright enforcement differ materially from civil enforcement?This article answers these questions and suggests guidelines for prosecutorial discretion. After a condensed history of criminal copyright law, we explain why “secondary” theories of infringement apply in the criminal, as well as civil, context and why the DMCA “safe harbor” defense is a red herring in criminal copyright actions. We then propose guidelines for prosecutors to consider before bringing a criminal enforcement action against filesharing services: Limiting prosecutions to theories of liability already established in civil case law, and targeting only those filesharing-service operators that openly defy civil enforcement actions.

More on the American models of technology transfer as models for developing countries

As a follow up to my earlier post about my article on how the American model of technology transfer can be used as models for developing countries, I wanted to post my conclusion in that article, which was published as The American Models of Technology Transfer: Contextualized Emulation by Developing Countries, 6 Buff. Intell. Prop. L.J. 104, 131-32 (2009).

The needs of developing countries are unique and diverse with particular government and research institution structures. The United States has responded to different types of institutions by creating technology transfer legislation specifically adapted to that institution’s particular needs. While two lines of legislation governing government laboratories and universities both seek to encourage the commercialization of the technology resulting from government funding, each has unique provisions, discussed in this Comment, which tailor the regulations to meet the particular needs of each institution in reaching the objective of commercialization.

If developing countries are seeking to pass legislation that attempts to harness the beneficial effect of giving research institutions clarification of ownership and authority to license technology funded by the government, these countries need to realize the highly specified nature of this legislation. These countries will need to closely examine the direction their economy is heading, the structure of their government, and the primary type of research institution within their countries. These countries will also need to weigh the benefits and pitfalls of the American legislation and also examine the provisions specially designed for particular institutions. For countries with highly regulated institutions, more closely compared to government owned and operated laboratories in the United States, provisions like CRADAs, which lower negotiation time and costs for outside input into the institution, and Commercial Development Plans, which encourage transparency in negotiations and clear objective for use by the public, could be beneficial. For countries with institutions similar to American universities, less restrictive legislation may be preferred.

The unique needs of developing countries will depend on the country, but many will want to create modifications to the Bayh-Dole legislation that helps to contextualize it to a country facing higher disease and poverty rates. This may include different utilization of licensing preferences to further particularized national objectives or possibly more allowance of research exemptions to help spur burgeoning research sectors. It may also include special structuring of technology transfer guidance, perhaps regional or national oversight of the commercialization process, in order to ensure the licensees uses technology for the public’s benefit. Finally, it may include access provisions better calculated to work in the specific country, whether this involves “march-in rights” paired with increased governmental willingness to intervene or other innovative strategies, such as mandatory creation of a plan for use of the technology for humanitarian purposes.

Whatever provisions the country ends up adopting, if a country decides to enact legislation modeled on Bayh-Dole, the country must carefully study the particular needs of its own country. Even within the United States there is diversity in the regulations governing how the technology resulting from government-funded research is commercialized. The individual needs of the unique institutions found in the United States and the special way each institution interacts with the structure of the U.S. government is the basis for this diversity. Likewise, developing countries must become acutely aware of their form of government and the institutions in their country. Instead of bluntly adopting Bayh-Dole as it exists in the United States, these countries must specially tailor their legislation to properly regulate their varied research institutions in order to attempt to achieve their country’s distinctive national goals and objectives.


American models of technology transfer for developing countries?

Argonne National Laboratory
Argonne National Laboratory

I’d like to share the introduction of my piece The American Models of Technology Transfer: Contextualized Emulation by Developing Countries, 6 Buff. Intell. Prop. L.J. 104 (2009). The paper discusses the differing models of technology transfer embraced by the U.S. government for innovation from universities versus government laboratories. It then uses these different models as helpful comparisons for developing countries in drafting their own intellectual-property laws. Here’s introduction, without footnotes:

The patenting of innovative technology has become an essential part of the U.S. economy, promoted by groundbreaking legislation that allows ownership of technology resulting from research funded by the federal government. Prior to legislation, less than four percent of the tens of thousands of government-funded inventions were licensed to industry, resulting in many technologies failing to reach practical application. Currently, multiple types of research institutions in the United States negotiate an increasing number of licenses every year, resulting in the issuance of more patents and the disclosure of more inventions to technology transfer offices. Even scholars who believe this growth would have occurred eventually without the Bayh-Dole Act (Bayh-Dole) agree that the legislation was important because it “accelerated this growth by clarifying ownership rules, by making these activities bureaucratically easier to administer, and by changing norms toward patenting and licensing at universities.”

Clarification of intellectual property ownership has had a substantially beneficial effect on the U.S. economy; many developed and developing countries are considering adopting or have already adopted the U.S. model. Many countries have adopted similar provisions, including a majority of European countries, China, Korea, South Africa, Brazil, and Malaysia. Many developing countries have special concerns relating to Bayh-Dole, specifically, as critics mention, varying degrees of low resources devoted to research funding, lack of “practically oriented universities,” and less established patent systems than the United States.

Granting permission to research institutions to take title and sell technologies to private industry, with a mandate to bring to practical application, was the creative solution Bayh-Dole introduced to fix the problem of government funded technologies sitting on a shelf and not finding practical application. Considering many in research institutions or industry do not have sufficient resources to fund projects and bring the technologies to practical application, it is questionable whether many countries even have the prerequisite problem Bayh-Dole sought to fix. However, many developed countries are beginning to use government funds for research and to prevent the problems Bayh-Dole addressed, attempting “to achieve similar economic success through effectively utilizing the outputs of publicly funded research.”

While some critics feel that instituting Bayh-Dole would create a greater burden due to over-patenting and high costs, others scholars feel that the base strategy of clarification of ownership is important for developing countries who seek to increase government funding to research institutions and want the technology produced to be brought to practical application by industry. However, even proponents agree that if Bayh- Dole is to be adopted in developing countries, it must “move beyond” just clarification of ownership to provide a more socially beneficial national innovation policy. Despite criticism, developing countries are likely to continue to attempt and emulate the success of U.S. legislation, especially as countries progress to a point where they are considering federal funding of research. For this reason, it is important to study U.S. legislation to understand how developing countries might realize its positive effects of accelerating practical application of government funded research by utilizing industry. Even more important perhaps is the study of potential safeguards, contextualized to the particular developing country, which could be built into legislation without sacrificing the positive benefits of the Bayh-Dole legislation.

In looking at American technology transfer, it is important to note that different legislation has stimulated technology transfer in universities than technology transfer in government laboratories, and accordingly, the practice of technology transfer in these two entities differs. As foreign governments look to the United States as a model system, it is important for them to understand these differences and enact legislation that will be the most beneficial for their country’s unique history, structure, and goals. The differences in the regulations for the two types of U.S. institutions should encourage developing countries to focus on the specifics of their unique institutions and create legislation appropriate for their unique needs. A few commentators have examined the regulations of university and small business technology transfer and have drawn conclusions on which aspects are beneficial for developing countries, but no commentator has  thoroughly examined the successful aspects of the more highly regulated government agency laboratories to evaluate their potential if adopted by developing countries. Perhaps commentators have overlooked this model of American technology transfer because developing countries have a low percentage of research funded by government and accordingly a low number of government funded laboratories. Some of the distinct provisions warrant closer examination, especially since some developing countries are characterized by an increased level of regulations. Furthermore, no commentary has emphasized how the need for different legislation for different types of institutions within the United States is an example of how developing countries must similarly tailor their legislation to the distinct organization of their research institution and their country’s unique objectives.

Patent Office plans first-ever satellite office – in Detroit

I think that this news has flown too far under the radar: The U.S. Patent and Trademark Office is planning to open its first satellite office in Detroit this July. According to AnnArbor.com, the agency expects employ 100 people in its first year; they will operate out of a 31,000 sq-ft building east of downtown.

It’s hard to underscore how awesome this is (and not just because it brings jobs). As the University of Michigan VP for research puts it: “This is great news for the Great Lakes region, the state of Michigan and the University of Michigan.”

Why Detroit? As acting chief communications officer of the USPTO, Richard Maulsby, told Inc.com’s Eric Markowitz, Detroit “fulfilled a number of critical criteria, including a high percentage of scientists and engineers in the workforce; access to major research institutions; a high volume of patenting activity; and a significant number of patent agents and attorneys in the area.”

According to Markowitz, “Detroit also has the highest concentration of industrial and mechanical engineers in the United States—about three times the U.S. average—according to the Bureau of Labor Statistics. In 2009, Michigan ranked 7th in the nation for the total number of patents with 3,516. And The Dice Report, a monthly look at the technology job market, reported last year that Detroit is now the fastest-growing region for technology jobs in America.”

Wow! Gene Quinn, President of IPWatchdog, thinks it also has to do with Michigan being a swing state in the upcoming election.

The Patent Office is opening two more satellite offices this year, and they are seeking input on locations. Quinn outlines the factors identified in the Federal Register as the following:

  1. Will the location increase outreach activities to better connect patent filers and innovators with the USPTO?
  2. Will the location enhance patent examiner retention and provide a strong quality of life;
  3. Will the location improve recruitment of patent examiners;
  4. Will the location decrease the number of patent applications;
  5. Will the location improve quality of patent examination;
  6. Does the location have available office space;
  7. Are there universities with strong engineering programs nearby?
  8. Are there research facilities nearby?
  9. Will there be a positive economic impact to the region?

Quinn doesn’t think that Detroit fares well under this rubric, but I disagree. I guess it depends on how you weight these factors. Number 9 and 6 are obvious wins. Cheap office space abounds (certainly more so than one of Quinn’s suggested Midwestern locations—Chicago). 1, 4, 5 are pretty amorphous. 7 and 8 are met. Detroit is filled with universities, and then Ann Arbor, just a short jaunt away, has University of Michigan, one of the nation’s premier engineering program, and Flint has Kettering University, also a great engineering school.

Quinn suggests the following 10 cities as possible locations: Orange County California; Houston, Texas (or somewhere in Texas); Melbourne, Florida; Syracuse, New York; Denver Colorado; Madison, Wisconsin; Chicago, Illinois; Albuquerque, New Mexico; San Diego, California; Northern California.

It seems obvious that somewhere in California needs to be on the list. What are your thoughts?